WSLCB - Board Caucus
(December 8, 2020)

Here are some observations from the Tuesday December 8th Washington State Liquor and Cannabis Board (WSLCB) Board Caucus meeting.

My top 3 takeaways:

• Board Chair Jane Rushford told members she would retire from the Board in 2021 but that her term may be extended “months” beyond the original date (audio - 2m).
  • The day before, Rushford announced to agency leadership that she would be retiring rather than seeking another term as Board Chair. Acknowledging it was a “tough decision,” Rushford said it aligned “with the conclusion of my term” on January 15th while noting she would “be around for a bit longer” than the official date.
  • After Board Member Ollie Garrett brought up the news, Rushford said she lacked “words that can express well enough my appreciation for you, [Board Member] Russ [Hauge], the Board Office staff, [Executive Assistant] Dustin [Dickson], and to all the stakeholders, to everyone at the LCB, and all of our licensees.” It had been an experience she would “appreciate, always.”
  • Garrett responded that it was “a pleasure working with you.”
  • Hauge commented that Rushford had been a leader at WSLCB “when we were asked to do something that had never been done before: create a new market in a federally controlled substance. And your professional touch, I think, has led us to whatever professional successes we’ve had.” He expected that in “the next few months we can get things set up to carry on.” Rushford agreed to help facilitate “a smooth transition” .
  • In a statement to Cannabis Observer, Rushford wrote, "I’ll be around for a while yet. Please extend my appreciation to your audiences – it’s been a great pleasure and rewarding to work with all of you."
  • Rushford was appointed to the Board by Governor Jay Inslee in January 2015, succeeding former Chair Sharon Foster. Prior to Rushford’s appointment she served as Deputy Director of the Department of Enterprise Services until her retirement from that position in 2014.
  • Members of the public may apply to the Governor’s Office to serve on the Board, or recommend another person to serve.

• Board Member Russ Hauge brought up feedback WSLCB received on the agency’s developing social equity program and his intention to engage more on the subject (audio - 7m).
  • Hauge told members he’d been reviewing the public discussion around social equity in the cannabis market and highlighted a December 4th Seattle Channel segment on the Washington State Legislative Task Force on Social Equity in Cannabis (WA Task Force on Social Equity in Cannabis).
  • Hauge asked about a “dimension of the social equity concern” where WSLCB might “have some conflict.” He brought up “investment from outside the state and whether, and to what extent” that incoming capital “would diminish the chances of, not just the smaller businesses, but particularly people who are trying to get a foothold in the business who haven’t been in it before - or at least not the legal business.” Promising to investigate his concern further, Hauge asked Garrett “if there’s anything going on in the task force that is touching on this I’d appreciate some guidance.”
  • Garrett, the WSLCB appointee to the task force, stated that she didn’t “think that that’s been part of the discussion” after HB 2263 was considered by lawmakers on January 16th, legislation which would have permitted out-of-state cannabis license ownership while contributing towards an undefined equity program. Hauge commented that the issue had been raised by Raft Hollingsworth, a licensee and equity task force member. Hauge said Hollingsworth’s remarks on the costs of standing up a cannabis business conveyed concern about a situation where “somebody comes in with a lot more money” and created “overwhelming” incentives for small businesses to sell and for market consolidation to accelerate.
    • Hear Hollingsworth’s comments on the increasing consolidation of Washington’s cannabis industry and associated challenges during his introduction at the task force’s October 30th meeting (audio - 5m, video).
  • Garrett replied that one requirement of the program was that licenses granted to equity applicants could only be sold to another entity who qualified as an equity applicant. She also believed out-of-state capital could “hurt or benefit” social equity licensees. She stressed the importance of evaluating potential consequences of out-of-state ownership to create “thoroughly vetted” policy and avoid “unintentional consequences” which could hurt small businesses. Hauge agreed.
    • Section 2(4) of HB 2870, the law creating the equity task force and program at WSLCB, stated that the Board could adopt rules to “require that licenses awarded under this section be transferred or sold only to individuals or groups of individuals who comply with the requirements for initial licensure as a social equity applicant.”
  • Garrett remarked that she had encouraged agency staff to listen to the agency’s equity outreach and the first task force meeting while lifting “the hat of protecting that we are not racists, and just really focus on what people are saying” around things like “the process, the requirements, the lack of technical assistance.” She believed that if WSLCB staff “can just try to take away ‘we are not racists’ and focus on the issues it would be easy to work through this process.” Garrett argued that rather than improving WSLCB’s licensing process, staff were “defending” past decisions and policies while ignoring “the issues” with prior application windows. Removing a “lens of defending not being racist” would benefit the program and agency. Hauge concurred, saying he was “happy to follow your lead on this.” Rushford added that even in “some degree of transition, it is my chief priority as well."
    • The second meeting of the WA Task Force on Social Equity in Cannabis was planned for Monday December 14th.

• Policy and Rules Coordinator Casey Schaufler offered a few updates on cannabis rulemaking, including an overview of proposed rules on cannabis vapor products.
  • Quality Control (QC) Testing and Product Requirements (Rulemaking Project, audio - <1). Schaufler told the Board a review of public comment from the November 18th public hearing on the supplemental CR-102 continued “and is expected to take a significant amount of time for a thorough analysis.”
  • HB 2826 Implementation (Rulemaking Project, audio - 3m). Schaufler explained that he would be presenting the rulemaking project’s CR-102 at the December 9th board meeting after hosting two listen and learn forums on September 1st and 29th. Noting the legislation was filed in response to “an outbreak of lung injuries” related to vaping products, he said the CR-102 would propose the following:
    • New definitions in WAC 314-55-010 for "characterizing flavor," as well as “terpenes,” “synthetic terpenes,” “botanical terpenes,” and “terpenoids.”
    • A new section on “marijuana vapor products” which would “outline the Board’s process for regulating cannabis vapor products.”
    • Another new section on ingredient disclosure, WAC 314-55-1055, was “currently active under the Board’s adoption of emergency rule” and had been in effect since October 2019.
      • Schaufler said the draft disclosure form was “still being revised outside the rulemaking process with effort focused on simplifying the form.”
      • He noted that the Washington State Board of Health (SBOH) permanently encoded their emergency ban “on the sale of vapor products containing vitamin E acetate” on November 5th.
        • See Cannabis Observer’s documentation of the SBOH Rulemaking Project, coverage of rulemaking around the SBOH ban, the public hearing and approval of the CR-103 on October 13th, and the agency’s page on vapor products and flavors.
  • Location Compliance Certificates (Rulemaking Project, audio - 1m). The proposed rules implementing SB 6206 were scheduled for a public hearing on December 9th. Schaufler noted “no formal comments have been received to date.”
  • Tier 1 Expansion (Rulemaking Project, audio - <1). Schaufler said staff analysis of feedback continued with evaluation of whether suggestions involved “statute or rule.” He hoped to have “a more robust update on this work in the near future.”